Don't despair on Doha (yet)

The latest "last-ditch" talks to save the Doha trade round foundered at the weekend with the atmosphere more poisonous than ever.

Five years on, the so-called development round is still grinding on with no breakthrough in sight. The roadblock remains as it ever was. The US and the EU will only cut their farms subsidies, which make it hard for developing countries to compete, only if the latter reduce their industrial tariffs.

The developing countries justifiably believe that the demand from the rich countries is unreasonable. As Robert Wade and various charities, such as Oxfam, point out, virtually no country has managed to industrialise and become "advanced" without protecting its infant industries. The Asian tigers from Japan to South Korea all protected their nascent industrial sector as a prelude to the Asian miracle.

Yet in this trade round that was supposed to yield benefits to the world's poorer countries, the richer states want to pull the rug from under the developing world.

The recriminations are flying thick and fast, but the EU is emerging as the most culpable party.

John Howard, the Australian prime minister, said Europe and Japan had so far failed to match the more ambitious proposals from the US that would go some way to opening trade in agricultural products across the globe.

"The Americans, to their credit, got the ball rolling, and unless there's an adequate response from the Europeans it won't happen," he told Macquarie radio. "So I still believe that the big stumbling block is the intransigence of the European Union."

That's not how the EU sees it. The EU trade commissioner, Peter Mandelson, puts the blame on the US.

"The US says it wants ambition in these talks but, as things stand at the moment, the US is not prepared to pay enough for that ambition."

But the EU stands condemned by findings from the Organisation for Economic Cooperation and Development, the Paris-based thinktank. A recent OECD report found the EU paid its farmers more than $180bn (£97.6bn) worth of protection during 2005 - the most by any developed nation bloc.

The best outcome would be for the rich countries to live up to their pledge to make Doha a real development round by dropping their demands for a cut in industrial tariffs and unilaterally reduce their own farm subsidies. It should be noted, however, that developing countries stand to make much larger gains from less protectionist policies for textiles and other industrial products in OECD countries.

It falls on the long-suffering Pascal Lamy, the head of the World Trade Organisation, to hold more talks to try and hold things together. To that end, there could be talks of the G6 (US, EU, Japan, Brazil, India and Australia) before the G8 summit in St Petersburg, Russia in mid-July.

Today there were signs that the EU may budge. Jose Manuel Barroso, the president of the European commission, said the EU could make further concessions.

Mr Barroso said he hoped the setback would build pressure for a deal in the next month.

"We still believe it's possible to have a successful outcome of Doha if all parties, the US and the G20 (developing nations) as well, make an effort. The European commission - the European Union because, of course, we need to have the member states with us as well - could do also something more if the others want to move."

While there is much gloom and doom after the failure of the latest round of talks, let's not forget how long it took to conclude the Uruguay round trade talks. It took seven and a half years to finish that set of negotiations, almost twice the original schedule. More countries are taking part in Doha and the issues are even more complicated; that's why it's proving to be such a hard slog.